The Five Percent Rule

If you are in the nonprofit world, then one of the rules that you are familiar with is the five percent rule governing foundations (not to be confused with the five second rule governing food dropped on the floor!). As a requirement for maintaining their tax exempt status, foundations are required to give away an amount equal to five percent of their assets every year. For example, if a foundation has assets worth $100 million, then the minimum amount of grants that it has to award is $5 million.

Collin County isn’t governed by this rule, after all it’s tax exempt because it’s part of the government of the State of Texas. One might hope that Collin County would set a good example anyway, but it doesn’t. Collin County has $15 million in assets in trust--$2 million more than it originally received when it sold the county’s public hospital back in 1983—to pay for health care for the indigent.

This year Collin County offered only $200,000 in grants to groups providing help care to the indigent—and some of those groups are giving the money back because the restrictions attached to the grants are so burdensome. http://www.dallasnews.com/sharedcontent/dws/news/city/collin/plano/stories/081709dnmetcollinhealth.3c34d84.html

That amount is only 1.33% of the $15 million in trust—only one third of the amount a charitable foundation would be required to expend. Remember, we aren’t talking about tax money here. Collin County doesn’t spend any tax money on healthcare for the poor. We’re only talking about money Collin County holds in trust for that very purpose.

Maybe Collin County isn’t spending the money because there isn’t any need? After all, Collin County is the richest county in Texas and one of the richest counties in the United States with an average family income 70% higher than that of Dallas County.

Well, there is substantial need. Collin County has a poverty rate (2008 estimate) of 6.2% or, based on its population of 762,010 (2008 est.), more than 47,000 people, with a disproportionate number of them children (7.6% poverty rate).

When the poor and uninsured in Collin County get sick, they come to Dallas County and go to Parkland, our public hospital. During 2004 the last year for which I could find figures, the cost to Parkland—and that means to residents of Dallas County—to treat uninsured residents of Collin County was $2.7 million. Now I wouldn’t advocate turning those patients away, but I would like to see Collin County make at least some effort to lessen the load on us. After all, the citizens of Dallas County are about to spend over $1 billion to build a new Parkland Hospital.

At least Collin County should do the minimum the law would require a private foundation in the same position to do. That would increase funding for heath care for the poor to $750,000 per year—5% of $15 million—in Collin County. Maybe that would save Dallas County some of that money we’re currently spending on behalf of our rich neighbors.

It’s one thing to be prudent and to be a good steward of the public’s money.

Collin County is just cheap.